INDOKEM LTD, MUMBAI V. CIT CIR 6, MUMBAI

ITA 3288/MUM/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7128 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 08-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Fair market value; Valuation report; Set aside
• Section: 143(3); 148; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI RAJESH KUMAR , AM AND SHRI AMARJIT SINGH , JM I.T.A. NO S . 3288 /M/ 20 1 4 & 3289 /M/201 4 ( ASSESSMENT YEAR S : 2008 - 09 & 2009 - 10 ) INDOCHEM LTD 410/411, KHATAU HOUSE, MOGUL LANE, MAHIM (W), MUMBAI - 400016 . VS. CIT, CIR - 6, AAYAKAR BHAVAN, MAHARSHI KARVE ROAD, MUMBAI - 400020. ./ ./ PAN/GIR NO. : AAACR0413R ( APPELLANT ) .. ( RESPONDENT ) DATE OF HEARING : 26 .0 2 .201 9 DATE OF PRONOUNCEMENT : 30 . 0 4 . 2019 O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE ABOVE MENTIONED APPEA LS AGAINST THE ORDER DATED 10 .0 3 .201 4 PASSED BY THE COMMIS S IONER OF INCOME TAX - 6 , MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE ASSESSMENT YEAR S 20 08 - 09 & 2009 - 10 IN VIEW OF PROVISIONS U/S 263 OF THE I.T. ACT. 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - I. THE LEARNED INCOME TAX OFFICER ERRED IN ASSESSING THE ANNUAL VALUE OF THE BASEMENT (5100 SQ. FT.) AND GROUND FLOOR (3700 SQ. FT.) PREMISES AT 'KHATAU HOUSE', SUBLET TO ' INDOCHEM LTD.' AT RS. ASSESSEE BY: SHRI NITESH JOSHI (AR) DEPARTMENT BY: SHRI AWUNGSHI GIMSON (D R) ITA NOS. 3288 /MUM/201 4 3289/MUM/2014 A.Y. 2008 - 09 & 2009 - 10 2 30,71,8 08/ - AND WHILE DOING SO HE AMONGST OTHER FAILED TO APPRECIATE THAT: A. THE ANNUAL LETTING VALUE OF THE PROPERTY WAS NOT IN ACCORDANCE WITH THE DIRECTIONS OF THE HONBLE ITAT FOR A.Y. 2001 - 02 TO 2006 - 07; B. THE ALV WAS NOT DETERMINED AS PER THE PROVISIONS OF THE ACT AND AS PER THE DECISION OF THE FULL BENCH OF THE HON'BLE DELHI HIGH COURT IN CASE OF CIT V MONI KUMAR SUBBA 333 ITR 38 . 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ISSUE FOR REVISION U/S 263 OF THE ACT ARISES IN RESPECT OF ASSESSEE COMPANY FOR THE A.Y.2008 - 09 & 2009 - 10 . THE EARLIER NAME OF THE ASSESSEE COMPANY WAS RADIO COMPONENT & TRANSISTORS LTD. (IN SHORT RCTL) WHICH HAD NOW AMALGAMATED IN TO NEW ENTITY NAMELY M/S. INDOCHEM LTD. THE AS SESSEE COMPANY GOT THE IMPUGNED PROPERTY ON RENT FR OM CARO NA LTD. THE TENANT INDOCHEM WAS GIVEN THE RIGHT TO GIVE IT ON RENT TO ANY OTHER SUB - TENANT. THE ASSESSEE COMPANY APART FROM GIVING AGREED RENT FOR THE BASEMENT AND GROUND FLOOR OF THE IMPUGNED PROPERTY HAD GIVEN INTEREST FREE DEPOSIT OF RS.3.5 CRORE TO CAR ONA LTD. T HE RENT FIXED WITH INDOCHEM WAS RS.26,400/ - . AFTER SMALL CHANGES , THE PROPERTY WAS GIVEN TO OTHER SUB - TENANT ON MONTHLY RENT OF RS.1,61,500/ - PER MONTH FOR THE GROUND FLOOR AND RS.3,01,000/ - PER MONTH FOR THE BASEMENT. 4. THE AO TOOK INTO ACCOUN T THE FACT THAT RENT RECEIVED BY INDOCHEM FOR THE SAME PROPERTY WAS MUCH HIGHER AS COMPARED TO THE LEASE RENTAL WHICH PAID TO THE RCTL. THE ASSESSING OFFICER PASSED ITA NOS. 3288 /MUM/201 4 3289/MUM/2014 A.Y. 2008 - 09 & 2009 - 10 3 THE ORDER ED ACCORDINGLY FOR THE A.Y. 2008 - 09. B Y THE TIME OF ASSESSMENT FOR THE NEXT YEAR W AS TAKEN, THE ORDER OF THE CIT(A) FOR THE A.Y. 2005 - 06 & 2006 - 07 WAS AVAILABLE WITH AO WHEREIN THE CIT(A) HAS DIRECTED THE AO TO REDUCE 15% FROM THE ALV DETERMINED BASED ON RENT RECEIVED BY INDOCHEM FROM MADURA COMMUNICATION AS RCTL HAD GIVEN ON LEASE UNFU RNISHED PREMISES TO INDOCHEM WHICH WAS LATER FURNISHED AND REMODIFIED BY THE LESSEE. THE AO ADOPTED THE REDUCED ALV FOR A.Y. 2009 - 10 ASSESSMENT. 5. THE ASSESSEE DID NOT ACCEPT THE MANNER IN WHICH THE FAIR MARKET RENT WAS WORKED OUT BY THE AO. THE CIT(A) VIDE HIS ORDERS DATED 27/02/2012 AND 12/06/2012 DIRECTED THE AO AS UNDER.: - THE ITAT, FOR AYS 2001 - 02 TO 2006 - 07 VIDE ORDER DATED 30.12.2011 IN CASE OF THE APPELLANT AT PARA 17 PAGE 26 DIRECTED THE A.O TO DETERMINE FAIR MARKET RENT U/S 23(1)(A). THE AR OF THE APPELLANT INFORMED THAT THE A.O IS YET TO PASS THE ORDERS FOR AYS 2001 - 02 TO 2006 - 07. AS DIRECTED IN THE APPEAL ORDER FOR A.Y 2008 - 09 DATED 27.02.2012. THE AO IS DIRECTED TO DETERMINE THE FAIR MARKET VALUE U/S 23(1 )(A) FOR THE PRESENT ASSESSMENT YEA R ALSO BY FOLLOWING THE METHOD ADOPTED BY HER WHILE DECIDING THE FAIR MARKET RENT FOR AYS 2001 - 02 TO 2006 - 07. 6. IT IS RELEVANT TO MENTION HERE THAT ON RECEIPT OF ORDER OF THE CIT(A) FOR A.Y. 2008 - 09 AND 2009 - 10 , THE THEN AO [ITO. 2(3)(1). MUMBAI PASSED AN ORDER GIVING EFF ECT TO THE CIT(A)'S ORDER FOR AY 2 008 - 009 VIDE ORDER DATED 26/3/ 2012 AND FOR A2009 - 10 VIDE ORDER DATED 20.07.2012. IN THESE ORDERS, THE A.O. GAVE RELIEF TO THE ASSESSEE BY ASSESSING HIM AT INCOME AS SHOWN BY THE ASSE SSEE IN THE RETURN OF IN COME FILED . THUS RENTAL INCOME OFFERED BY THE ASSESSEE WAS ITA NOS. 3288 /MUM/201 4 3289/MUM/2014 A.Y. 2008 - 09 & 2009 - 10 4 CONSIDERED AS FAIR MARKET RENT. SUBSEQUENTLY NOTICED THAT ANOTHER ORDER WAS PASSED ON 29/01/2013 BY THE ASSESSING OFFICER FOR BOTH THE YEARS I.E. A.Y. 2008 - 09 & 2009 - 10, AGAINST 'ORDER GIVING EFFEC T TO THE CIT(A)'S ORDER' ASSUMING THAT DIRECTION OF THE CIT(A) HAS NOT BEEN FOLLOWED WHILE GIVING APPEAL EFFECT IN THE EARLIER 'ORDER GIVING EFFECT TO THE CIT(A) ORDER VIDE ORDER DATED 26.03.2012 FOR A.Y. 2008 - 09 & ORDER DATED 20.07.2012 FOR A.Y. 2009 - 10 . BOTH THE ORDER DATED 29.01.2013 WERE CHALLENGED BY THE ASSESSEE BEFORE THE CIT(A) AS AO HAD ADOPTED FIGURE OF ALV FOR WORKING OUT INCOME FROM HOUSE PROPERTY AS ADOPTED BY THE AO IN THE ORDER GIVING EFFECT TO THE ITAT ORDER DATED 20.12.2013 FOR THE A.Y. 20 01 - 02 TO 2006 - 07. AS THERE ARE TWO ORDERS, ORDER GIVING EFFECT TO THE CIT(A) ORDERS AVAILABLE FOR THE SAME ASSESSMENT YEARS FOR THE A.Y. 2008 - 09 & 2009 - 10 AND I.E. TWO ORDERS IS FOR THE A.Y 2008 - 09 AND ALSO FOR THE 2009 - 10. THE SUBSEQUENT ORDER DATED 29.0 1.2013 WAS PASSED WHEN ALREADY SUBSISTING ORDER DATED 26.03.2012 FOR THE A.Y. 2008 0 AND ORDER DATED 20.07.2012 FOR THE A.Y. 2009 - 10 WAS IN FORCED. SUBSEQUENT ORDER DATED 29.01.2013 CANNOT BE TREATED AS VALID ORDER IN VIEW OF THE DECISION BAKELITE H YLAM LT D. VS. CIT 171 ITR 344 (AP), CIT VS. INDUSTRIAL MACHINERY MANUFACTURING P. LTD. 282 ITR 592 (GUJ). CIT VS. DHAMPUR SUGAR MILLS LTD. 170 ITR 449 (ALL.) ETC. AS ORDER GIVING APPEAL EFFECT (ORDER DATED 26.03.2012 FOR A.Y. 2008 - 09 & ORDER DATED 20.07.2012 FOR A.Y. 2009 - 10) GOT MERGED WITH THE ASSESSMENT ORDER AND CONSEQUENTLY ORDER GIVING APPEAL EFFECT DATED ITA NOS. 3288 /MUM/201 4 3289/MUM/2014 A.Y. 2008 - 09 & 2009 - 10 5 26.03.2012 FOR A.Y. FOR A.Y. 2008 - 09 & ORDER DATED 20.07.2012 FOR A.Y. 2009 - 10 ALONE ARE TO BE TREATED AS ASSESSMENT ORDER AS IF PASSED U/S 143(3) OR U/ S 143(3) R.W.S. 147 OF THE ACT. THE CIT(A) WHILE ALLOWING ASSESSEES APPEAL FOR A.Y. 2001 - 02 TO 2006 - 07 HAS TAKEN THIS VIEW ONLY. 7 . THEREAFTER, THE CIT(A) HAS RELIED UPON THE DECISION OF THE CASE DECIDED BY MONI KUMAR SUBBA AND REVISED THE ORDER BY AO GIVING EFFECT TO THE CIT(A) ORDER. THE ASSESSMENT ORDER SET ASIDE THE ORDER GIVING EFFECT TO THE YEAR OF THE CIT(A) PASSED BY AO U/S 263 OF THE ACT AND DIRECTED TO PASS THE ANOTHER ORDER BY GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. FEELING AGGR IEVED, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO . 1 : - 6 . UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE ORDER U/S 263 OF THE ACT ON THE BASIS OF THIS FACT THAT THE SIMILAR ISSUE HAS BEEN DECIDED BY HONBLE ITAT IN THE ASSESSEES OWN C ASE FOR THE A.Y. 2001 - 02 TO 2006 - 07 BUT THE SAME WAS NOT CONSIDER ED AND ACCORDINGLY THE ORDER PASSED BY AO U/S 263 OF THE ACT IS NOT SUSTAINABLE IN THE EYES OF LAW. THE COPY OF ORDER DATED 25.07.2018 PASSED BY HONBLE ITAT IN THE ASSESSEES OWN CASE FOR TH E A.Y. 2001 - 02 TO 2006 - 07 IS ON THE FILE IN WHICH THE ORDER PASSED BY AO U/S 263 OF THE ACT IN SIMILAR CIRCUMSTANCES HAS BEEN ORDER TO BE SET ASIDE, IN VIEW OF THE BAR OF JURISDICTION PRESCRIBED BY CLAUSE C OF EXPLANATION - 1 BELOW ITA NOS. 3288 /MUM/201 4 3289/MUM/2014 A.Y. 2008 - 09 & 2009 - 10 6 SECTION 263 OF THE ACT. THE FACTUAL POSITION IS NOT DIFFERENT IN THIS CASE. THE AO HAS PASSED THE ORDER GIVING EFFECT TO THE CIT(A) ORDER DATED 05.01.2012 ON 26.03.2012 FOR THE A.Y. 2008 - 09 AND ALSO PASSED HIS ORDER GIVING EFFECT TO THE CIT ORDER DATED 12.06.2013 BY VIRTUE OF ORD ER DATED 20.07.2012 WHICH HAVE BEEN SET ASIDE BY CIT(A) BY INVOKING THE POWER U/S 263 OF THE ACT. IN SIMILAR CIRCUMSTANCES, THE CIT HAS INVOK ED THE POWER OF U/S 263 OF THE ACT BY VIRTUE OF ORDER DATED 11.03.2014 FOR THE A.Y.2001 - 02 TO 2006 - 07. THE VALIDITY OF SAID ORDER WAS CHALLENGED BY ASSESSEE WHICH HAS BEEN DECIDED BY HONBLE ITAT BY VIRTUE OF ORDER DATED 25.07.2018. THE MATTER OF CONTROVERSY HAS DULY BEEN COVERED BY THE ORDER OF THE HONBLE ITAT DATED 25.07.2017 IN THE ASSESSEES OWN CASE FOR THE A.Y. 2001 - 02 TO 2006 - 07 IN WHICH THE CIT(A) INVOKING THE POWER U/S 263 OF THE ACT. THE RELEVANT FINDING IS HEREBY REPRODUCED AS UNDER.: - 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND FROM THE FACTS OF THE CASE THAT ASSESSEES ASSESSMENT WAS REOPENED BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT. IN THE COURSE OF THESE PROCEEDINGS, THE ASSESSEE HAD INTER ALIA URGED THAT MUNICIPAL RATEABLE VALUE OF THE SAID PREMISES MAY BE TAKEN AS ITS ANNUAL VALUE UNDER SECTION 23(1)(A) OF THE ACT. THE SAID SUBMISSION WAS REJECTED BY THE AO AS AN ADJUSTMENT TO THE EXTENT OF 10% OF THE SAID VALUE WOUL D BE REQUIRED FOR DETERMINATION OF ANNUAL VALUE FOR INCOME TAX PURPOSES. NOTHING WAS FOUND BY THE AO TO DOUBT THE CORRECTNESS OF SUCH VALUE. THE AO NOTED THAT INDOCHEM LIMITED HAD FURTHER SUB - LET THE SAID PREMISES TO SUMANGAL HOLDINGS FOR A MONTHLY RENT OF 67,275/ - EQUIVALENT TO 8,07,300/ - PER ANNUM. BASED ON THE RENT RECEIVED BY INDOCHEM LIMITED FROM ITS TENANT, THE AO COMPUTED THE ANNUAL VALUE IN THE ASSESSEES CASE AT 8,07,300/ - UNDER SECTION 23(1)(A) OF THE ACT. THIS RE - ASSESSMENT WAS CHALLENGED I N APPEAL BEFORE THE CIT(A) AND THE CIT(A) BY HIS APPELLATE ORDER GRANTED DISCOUNT OF 20% TO THE ANNUAL VALUE AS ITA NOS. 3288 /MUM/201 4 3289/MUM/2014 A.Y. 2008 - 09 & 2009 - 10 7 DETERMINED BY THE AO AND DETERMINED SUCH VALUE AT 60,548/ - PER MONTH EQUIVALENT TO 7,26,576/ - PER ANNUM. AGGRIEVED, ASSESSEE PREFERRED THE A PPEAL BEFORE TRIBUNAL. 10. THE TRIBUNAL IN ITS APPELLATE ORDER HAS FOLLOWED THE DECISION OF FULL BENCH OF THE DELHI HIGH COURT IN THE CASE OF MONI KUMAR SUBBA (SURPRA) & SET ASIDE THE MATTER BACK TO THE AO FOR RE - DETERMINATION OF THE ANNUAL VALUE. IT DIRECTED THE AO TO RE - DETERMINE THE ANNUAL VALUE UNDER SECTION 23(L)(A) OF THE ACT AND HELD THAT STANDARD RENT OR MUNICIPAL RATEABLE VALUE WOULD BE FACTORS RELEVANT FOR DETER MINATION OF ANNUAL VALUE UNDER SECTION 23(L)(A) OF THE ACT. ACCORDING TO THE TRIBUNAL, MUNICIPAL RATEABLE VALUE WOULD BE SAFE GUIDE FOR DETERMINATION OF ANNUAL VALUE UNDER SECTION 23(L)(A), UNLESS THE AO FOUND THAT SUCH VALUE WAS NOT BASED ON RELEVANT MATE RIAL FOR DETERMINING FAIR RENT IN THE MARKET AND THERE WAS SUFFICIENT MATERIAL ON RECORD FOR TAKING DIFFERENT VALUATION. IT WAS ONLY THEN, THAT IT WOULD BE OPEN TO THE AO TO DETERMINE THE FAIR RENT ON THE BASIS OF RELEVANT EVIDENCE AND MATERIALS. UNLESS TH E MUNICIPAL RATEABLE VALUE WAS DOUBTED, IT WAS NOT OPEN TO THE AO TO DETERMINE THE FAIR RENT OR USE IT AS A BASIS FOR DETERMINATION OF ANNUAL VALUE UNDER SECTION 23(L)(A) OF THE ACT. LASTLY, THE ANNUAL VALUE FOR THE PURPOSES OF SECTION 23(L)(A) OF THE ACT, COULD NOT EXCEED THE STANDARD RENT WHICH WAS THE UPPER LIMIT. THEREFORE, THE EXERCISE AS REQUIRED TO BE CARRIED OUT BY THE AO AS PER THE TRIBUNAL'S ORDER WAS TO ADOPT THE MUNICIPAL RATEABLE VALUE AS THE ANNUAL VALUE FOR THE PURPOSES OF SECTION 23(L)(A) OF THE ACT UNLESS HE FOUND THAT SUCH VALUE WAS NOT BASED ON RELEVANT MATERIAL FOR DETERMINING FAIR RENT IN THE MARKET AND THERE WAS SUFFICIENT MATERIAL ON RECORD FOR TAKING DIFFERENT VALUATION. IT WAS ONLY IN SUCH CIRCUMSTANCES THAT THE AO COULD DETERMINE TH E FAIR RENT FOR THE PURPOSES OF SECTION 23(L)(A) OF THE ACT. EVEN IF SUCH FAIR RENT WAS DETERMINED, THE ANNUAL VALUE COULD NOT EXCEED THE STANDARD RENT AS THAT WAS THE UPPER LIMIT FOR THE PURPOSES OF COMPUTATION OF ANNUAL VALUE UNDER SECTION 23(1)(A) OF TH E ACT. 11. THE AO AFTER CONSIDERING THE MATERIAL AS GATHERED BY HER IN THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS AND THE DIRECTIONS OF THE TRIBUNAL UPHELD THE ANNUAL VALUE, IN THE PRESENT CASE I.E. AT 3, 16,800 BASED ON THE RENT ACTUALLY RECEIVED BY THE ASSESSEE FROM INDOCHEM LIMITED. WE FIND FROM THE FACTS OF THE CASE THAT INFORMATION WITH RESPECT TO MUNICIPAL RATEABLE VALUE WAS AVAILABLE WITH HER IN THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS AND THIS POSITION HAS ALSO BEEN ACCEPTED BY THE CIT IN THE REVISION ORDER PASSED UNDER SECTION 263 OF THE ACT. SINCE, THERE WAS NOTHING TO SUGGEST THAT THE MUNICIPAL RATEABLE VALUE WAS NOT BASED ON RELEVANT MATERIAL, THE AO WAS JUSTIFIED IN TAKING ITA NOS. 3288 /MUM/201 4 3289/MUM/2014 A.Y. 2008 - 09 & 2009 - 10 8 THE SAID VALUE OF 2,14,495/ - AS THE ANNUAL VALUE UNDER SECTI ON 23(1)(A) OF THE ACT AND 3,16,800/ - AS SUCH VALUE UNDER SECTION 23(1)(B) OF THE ACT. HENCE, SHE HAS TAKEN THE ANNUAL VALUE FOR THE PURPOSES OF SECTION 23 OF THE ACT AS 3,16,800/ - BEING THE HIGHER OF THE VALUES ARRIVED AT BASED ON CLAUSES (A) OR (B). THEREFORE, THERE IS NO ERROR IN THE ORDER DATED 14.02.2012 PASSED BY THE AO AND SHE HAS GIVEN EFFECT TO THE TRIBUNAL'S ORDER AFTER FULL APPLICATION OF MIND. THE AO PASSED SECOND ORDER GIVING EFFECT TO THE TRIBUNALS ORDER, DETERMINING THE ANNUAL VALUE OF T HE SAID PREMISES AT 24,10,471/ - AND INCOME FROM HOUSE PROPERTY AFTER ALLOWING THE NECESSARY DEDUCTIONS AT 11,31,664/ - . FOR THIS PURPOSE, HE HAS DETERMINED THE ANNUAL VALUE BASED ON THE' VALUE ADOPTED BY VALUER M/S NADKARNI& CO. IN ITS VALUATION REPORT. AGGRIEVED BY THE AFORESAID ORDER PASSED BY THE AO, THE ASSESSEE HAD FILED AN APPEAL BEFORE THE CIT(A). IN THE SAID APPEAL, THE ASSESSEE HAD INTER - ALIA URGED THAT THE AO WAS NOT JUSTIFIED IN PASSING THE ORDER DATED 20.12.2012 AS THERE CANNOT BE MORE THAN O NE ASSESSMENT ORDER FOR THE SAME YEAR AND, IN THE PRESENT CASE, ORDER DATED 14.02.2012 PASSED BY THE AO SHOULD BE REGARDED AS THE VALID ORDER. IT WAS ALSO URGED THAT THE AO ERRED IN NOT ASSESSING THE ANNUAL VALUE IN ACCORDANCE WITH THE DIRECTIONS OF THE TR IBUNAL AND THE DECISION OF THE FULL BENCH OF THE DELHI HIGH COURT IN THE CASE OF MONI KUMAR SUBBA (SUPRA). THE ISSUE AS NOW RAISED BY THE CIT IN THE REVISION PROCEEDINGS UNDER SECTION 263 OF THE ACT WAS A SUBJECT MATTER OF APPEAL IN THE SAID APPEAL. THE CI T(A) HAS HELD THAT ORDER DATED 14.02.2012 PASSED BY THE AO GIVING EFFECT TO THE TRIBUNAL'S ORDER IS THE VALID ORDER AND THE SECOND ORDER DATED 20.12.2012 PASSED BY HIM AGAIN GIVING EFFECT TO THE TRIBUNAL'S ORDER WAS WHILE DEALING WITH THE ASSESSEE'S GROUND WITH RESPECT TO DETERMINATION OF ANNUAL VALUE, WHICH ACCORDING TO IT WAS NOT IN ACCORDANCE WITH THE DIRECTIONS IN THE TRIBUNAL'S ORDER, HE HAS OBSERVED THAT IT WAS THE DUTY OF THE AO TO DETERMINE THE STANDARD RENT OF THE SAID PREMISES AS PER THE RENT CONT ROL LEGISLATION. ACCORDING TO HIM, LOWER OF THE STANDARD RENT OR THE FAIR RENT WOULD BE REGARDED AS THE ANNUAL VALUE FOR THE PURPOSES OF SECTION 23 OF THE ACT. SINCE, THE AO HAD PROCEEDED ON THE BASIS OF FAIR RENT DETERMINED BY THE VALUER WITHOUT DETERMINA TION OF THE STANDARD RENT OF THE SAID PREMISES, THE DIRECTION OF THE TRIBUNAL HAD NOT BEEN CARRIED OUT. IN VIEW OF THESE FACTS, WE FIND THAT THE REVENUE ISSUED SHOW - CAUSE NOTICE UNDER SECTION 263 OF THE ACT AND REFERRED TO CERTAIN EXTRACTS FROM THE DECISIO NS OF THE FULL BENCH OF THE DELHI HIGH COURT IN THE CASE OF MONI KUMAR SUBBA (SUPRA) AND ALLEGED THAT THE AO DID NOT CONSIDER THE FACTORS ENUMERATED IN THE SAID DECISION WHILE PASSING THE ORDER GIVING EFFECT TO THE TRIBUNAL'S ORDER. HE REFERRED TO VALUATIO N REPORT OF M/S NADKARNI & CO. TO ALLEGE THAT THE FAIR MARKET RENT WHICH ITA NOS. 3288 /MUM/201 4 3289/MUM/2014 A.Y. 2008 - 09 & 2009 - 10 9 COULD BE FETCHED BY THE SAID PROPERTY WAS SUBSTANTIALLY HIGHER THAN THE AMOUNT OFFERED FOR TAX BY THE ASSESSEE. HE ALSO OBSERVED THAT THE AO DID NOT TRY TO CONSIDER WHAT THE MUNICIPAL VALUE OF THE SAID PREMISES WAS AND WHETHER THE SAID VALUE REPRESENTED FAIR MARKET RENT PREVAILING DURING THE RELEVANT PERIOD. HE HAS DISCARDED THE APPLICATION OF RENT CONTROL ACT AS UNREASONABLE AND ARBITRARY. REFERENCE HAS ALSO BEEN MADE TO THE INTEREST FREE SECURITY DEPOSIT PLACED BY INDOCHEM LIMITED WITH THE ASSESSEE. ACCORDING TO HIM, AO ALSO FAILED TO CONSIDER THE RENT AS RECEIVED BY INDOCHEM LIMITED FROM ITS TENANTS OR INFORMATION AVAILABLE ON VARIOUS WEB - SITES. REFERRING TO THE ABOVE, HE ALLEGED THA T FAILURE ON THE PART OF THE AO TO MAKE RELEVANT AND MEANINGFUL ENQUIRES HAD MADE HER ORDER DATED 14.02.2012 GIVING EFFECT TO THE TRIBUNAL'S ORDER AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. ASSESSEE REPLIED TO THE ABOVE REFERRED SHOW CAU SE NOTICE, HIGHLIGHTING THE CONCLUSION REACHED BY THE FULL BENCH OF THE DELHI HIGH COURT IN THE CASE OF MONI KUMAR SUBBA (SUPRA) AS INTER - ALIA LAYING DOWN THAT STANDARD RENT IS THE UPPER LIMIT FOR DETERMINATION OF ANNUAL VALUE UNDER SECTION 23 OF THE ACT. FURTHER, MUNICIPAL RATEABLE VALUE COULD BE CONSIDERED AS A RATIONAL YARD STICK TO DETERMINE THE ANNUAL VALUE UNLESS THE AO CAN SHOW THAT THE RATEABLE VALUE UNDER THE MUNICIPAL LAWS DID NOT REPRESENT THE CORRECT FAIR RENT. HIS ATTENTION WAS DRAWN TO THE FAC T THAT, THE ASSESSEE HAD LET OUT THE SAID PREMISES TO INDOCHEM LIMITED IN THE YEAR 1995 IN A BARE SHELL FORM ON WHICH SUBSTANTIAL EXPENDITURE HAD BEEN INCURRED BY THEM TO MAKE IT SUITABLE TO BE USED AS AN OFFICE. IT WAS ALSO HIGHLIGHTED THAT MUNICIPAL RATE ABLE VALUE FOR THE PRESENT YEAR. 12. EVENTUALLY, THE CIT PASSED THE REVISION ORDER UNDER SECTION 263 OF THE ACT. ACCORDING TO HIM, ORDER DATED 14.02.2012 WAS PASSED BY THE AO WITHOUT PERUSING THE SAID DETAILS PROPERLY AND CARRYING OUT THE ENQUIRIES TO THE LOGICAL END. HE HAS THEREAFTER IN PARAGRAPH 3 OF HIS ORDER OBSERVED THAT (A) THE AO DID NOT CONSIDER WHETHER THE ACTUAL RENT RECEIVED IS FAIR MARKET RENT OR IT IS DEFLATED BY REASONS OF EXTRANEOUS CONSIDERATION I.E., RECEIPT OF INTEREST FREE SECURITY DEPO SIT OF RS. 3.50 CRORE; (B) THE AO DID NOT WORK OUT THE RENT WHICH THE PROPERTY MIGHT HAVE REASONABLY FETCHED IF THE TRANSACTION WAS AT ARMS LENGTH BETWEEN A WILLING LESSOR AND WILLING LESSEE; (C) THE AO DID NOT WORK OUT THE MUNICIPAL RATEABLE VALUE AND WHE THER THIS REPRESENTED THE FAIR MARKET RENT AND (D) THE AO ALSO DID NOT CONSIDER WHETHER ANY STANDARD RENT HAD BEEN FIXED BY THE RENT CONTROLLER FOR THE SAID PREMISES. ACCORDING TO HIM, THE AO DID NOT FOLLOW THE LETTER AND SPIRIT OF THE DECISION OF THE DELH I HIGH COURT IN THE CASE OF MONI KUMAR SUBBA (SUPRA) WHILE PASSING HER ORDER DATED 14.02.2012. THIS HAD MADE THE ORDER DATED 14.02.20 12 ITA NOS. 3288 /MUM/201 4 3289/MUM/2014 A.Y. 2008 - 09 & 2009 - 10 10 PASSED BY THE AO AS ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 13. ON THE ABOVE FACTS, WE ARE OF THE VIEW THAT THE CIT WAS NOT JUSTIFIED IN ASSUMING JURISDICTION UNDER SECTION 263 OF THE ACT, FOR THE REASONS THAT AS PER CLAUSE (C) OF EXPLANATION 1 BELOW SECTION 263(1) OF THE ACT, THE COMMISSIONER OF INCOME - TAX CANNOT EXERCISE JURISDICTION U NDER THE SAID SECTION WITH RESPECT TO AN ISSUE WHICH IS THE SUBJECT MATTER OF AN APPEAL BEFORE THE CIT(A) AND HAS BEEN CONSIDERED AND DECIDED IN SUCH APPEAL. IN THE PRESENT CASE, THE CIT HAS EXERCISED HIS JURISDICTION 32 ITA NOS. 3382 - 3387/MUM/2014 UNDER S ECTION 263 OF THE ACT FOR THE PURPOSES OF DETERMINATION OF THE ANNUAL VALUE OF THE SAID PREMISES UNDER SECTION 23(1)(A) OF THE ACT, IN VIEW OF THE TRIBUNAL'S ORDER DATED 30.12.2011 AND THE JUDGMENT OF FULL BENCH OF THE DELHI HIGH COURT IN MONI KUMAR SUBBA (SUPRA). THE SAID ISSUE WAS A SUBJECT MATTER OF APPEAL BEFORE THE CIT(A) AGAINST ORDER DATED 20.12.2012 PASSED BY THE AO GIVING EFFECT TO THE TRIBUNAL'S ORDER. THE CIT(A) HAS ALSO CONSIDERED THE SAID ISSUE IN HIS APPELLATE ORDER DATED 23. 10.2013 IN PARAGR APH 8 AT PAGES 20 TO 27 OF THE ORDER. IN THIS REGARD, HE HAS OBSERVED THAT THE DETERMINATION OF ANNUAL VALUE ONLY BASED ON THE FAIR RENT IS INCORRECT WITHOUT ASCERTAINING THE STANDARD RENT OF THE SAID PREMISES. ACCORDING TO HIM, STANDARD RENT AS DETERMINED UNDER THE RENT CONTROL LEGISLATION IS THE UPPER LIMIT AND ANNUAL VALUE UNDER SECTION 23(1)(A) OF THE ACT HAS TO BE LOWER OF THE STANDARD RENT OR THE FAIR RENT. A BARE PERUSAL OF THIS PART OF THE CIT(A)'S ORDER SHOWS THAT DETERMINATION OF ANNUAL VALUE OF T HE SAID PREMISES AS PER THE TRIBUNAL'S ORDER WAS A SUBJECT OF MATTER OF APPEAL BEFORE THE CIT(A) WHICH HAS BEEN CONSIDERED AND DECIDED BY HIM. THEREFORE, THE CIT COULD NOT HAVE ASSUMED JURISDICTION UNDER SECTION 263 OF THE ACT IN RESPECT OF THE SAID ISSUE. THE CIT IN HIS REVISION ORDER DATED 11.03.2014 PASSED UNDER SECTION 263 OF THE ACT, HAS OBSERVED THAT THE ORDER DATED 23.10.2013 PASSED BY THE CIT(A) AND THE CONSIDERATION OF THE ISSUES THEREIN WAS RESTRICTED TO THE SECOND ORDER DATED 20.12.2012 PASSED BY THE AO GIVING EFFECT TO THE TRIBUNAL'S ORDER. ACCORDING TO HIM, THE SUBJECT MATTER OF APPEAL ADJUDICATED BY THE CIT(A) IN THE SAID ORDER WOULD NOT BE HIT BY THE PROVISIONS OF CLAUSE (C) OF EXPLANATION - 1 BELOW SECTION 263(1) OF THE ACT. ACCORDING TO US, TH E REAL TEST FOR DETERMINATION OF SUBJECT MATTER OF APPEAL IS THAT, ASSUMING THAT THE CIT(A)'S ORDER DATED 23. 10.2013 WAS APPEALED BY THE REVENUE BEFORE THE TRIBUNAL AND HIS FINDING WITH RESPECT TO THE VALIDITY OF THE ORDER DATED 20.12.2012 PASSED BY THE A O IN VIEW OF HIS EARLIER ORDER DATED 14.02.2012 WAS REVERSED, WHETHER THE CONCLUSION 33 ITA NOS. 3382 - 3387/MUM/2014 REACHED BY THE CIT(A) WITH RESPECT TO DETERMINATION OF ANNUAL VALUE UNDER SECTION 23 OF THE ACT IN ACCORDANCE WITH THE DIRECTIONS OF THE ITA NOS. 3288 /MUM/201 4 3289/MUM/2014 A.Y. 2008 - 09 & 2009 - 10 11 TRI BUNAL IN ITS ORDER DATED 30.12.2011 WOULD STAND. SINCE, THE SAID CONCLUSION REACHED BY THE CIT(A) WOULD BE BINDING ON THE ASSESSEE AS WELL AS THE REVENUE, THE SUBJECT MATTER OF APPEAL INCLUDING THE CONSIDERATION AND DECISION OF THE CIT(A) WAS ON THE SAME S UBJECT MATTER ON WHICH THE CIT HAS REVISED THE ASSESSMENT BY INVOKING HIS POWERS UNDER SECTION 263 OF THE ACT. AN ASSESSMENT ORDER MAY BE CHALLENGED BY AN ASSESSEE IN APPEAL AS BEYOND JURISDICTION AS WELL AS ON MERITS. IN SUCH APPEAL, IT IS OPEN TO THE APP ELLATE AUTHORITY TO DECIDE BOTH THE ISSUES I.E., WITH RESPECT TO THE JURISDICTION AS WELL AS ON MERITS. WE HAVE GONE THROUGH THE CASE LAW OF SREENIVASA PITTY & SONS [1988] 173 ITR 306 (AP), WHEREIN IT HAS BEEN HELD THAT THE TRIBUNAL OR ANY OTHER APPELLATE AUTHORITY IS DUTY BOUND TO CONSIDER ALL THE ISSUES ARISING IN THE APPEAL AND NOT DECIDE THE APPEAL BASED ONLY ON THE JURISDICTIONAL ISSUE OR AN ALTERNATE CLAIM. HONBLE HIGH COURT HELD AS UNDER: - 4. MR. A. SATYANARAYANA, THE LEARNED COUNSEL FOR THE ASSES SEE REPRESENTS TO THIS COURT THAT THE MATTER RELATES TO 1969 - 70 AND NEARLY TWO DECADES HAVE SINCE ELAPSED, THE QUESTION REGARDING THE MERITS REMAINED UNRESOLVED CAUSING CONSIDERABLE HARDSHIP TO THE ASSESSEE. IT WAS POINTED OUT THAT ALTHOUGH THERE WAS A DIR ECTION BY THE TRIBUNAL TO THE AAC TO DECIDE THE CASE ON MERITS THE MATTER WAS NOT TAKEN UP BY THE LEARNED AAC AND IN THE MEANTIME SOME COMPLICATIONS HAD SET IN. WE CAN NOT OVER EMPHASIS THE NEED ON THE PART OF THE APPELLATE AUTHORITIES TO DEAL WITH ALL THE CONTENTIONS URGED AT THE TIME OF DISPOSAL OF THE APPEAL. THE PRACTICE OF TAKING UP ONE AMONGST SEVERAL CONTENTIONS AND ALLOWING THE APPEAL ON THAT GROUND WOULD RESULT IN PIECEMEAL DISPOSAL OF THE APPEAL CAUSING CONSIDERABLE TIME LAG AND THE CONSEQUENT HAR DSHIP ON ACCOUNT OF THE SUPERIOR APPELLATE AUTHORITIES TAKING CONTRARY VIEWS IN THE MATTER. IN THE INTERESTS OF ALL CONCERNED APPELLATE AUTHORITIES LIKE THE ASSISTANT COMMISSIONERS, THE COMMISSIONERS AND THE TRIBUNAL SHOULD ADDRESS THEMSELVES TO ALL THE CO NTENTIONS RAISED BEFORE THEM AND DISPOSE THEM OF SO THAT THERE IS A DECISION ON ALL THE POINTS URGED. WHEN THE MATTER IS PROCESSED NO FURTHER TIME WILL BE LOST BY THE NECESSITY TO REMAND THE MATTER ON MATTERS NOT CONSIDERED. WE HOPE THE LEARNED AAC WILL TA KE UP THE MATTER WITHOUT FURTHER DELAY AND RECORD HIS VIEWS ON THE QUESTION ON MERITS. THE REFERENCE IS ANSWERED ACCORDINGLY. NO COSTS. 14. IN THE PRESENT CASE ALSO ORDER DATED 20.12.2012 PASSED BY THE AO GIVING EFFECT TO THE TRIBUNAL'S ORDER WAS CHALLEN GED BEFORE THE CIT(A) AS WITHOUT JURISDICTION AS WELL AS ON MERITS BUT THE FINDING GIVEN BY THE ITA NOS. 3288 /MUM/201 4 3289/MUM/2014 A.Y. 2008 - 09 & 2009 - 10 12 CIT(A) WITH RESPECT TO THE ORDER DATED 20.12.2012 PASSED BY THE AO, AS BEYOND JURISDICTION AND THEREFORE THE MERITS OF THE MATTER BECOMING ACADEMIC, HE HAS ALSO RIGHTLY ADJUDICATED THE MERITS OF THE MATTER. HENCE, IN OUR VIEW, THE BAR ON JURISDICTION PRESCRIBED BY CLAUSE (C) OF EXPLANATION 1 BELOW SECTION 263 APPLIES TO THIS CASE. THE CIT HAS RELIED UPON CERTAIN DECISIONS TO JUSTIFY HIS EXERCISE OF JURISDICTION U NDER SECTION 263 OF THE ACT, WHICH ACCORDING TO HIM, WOULD SHOW THAT THE ISSUE WITH RESPECT TO DETERMINATION OF ANNUAL VALUE UNDER SECTION 23 OF THE ACT IN VIEW OF THE DIRECTIONS OF THE TRIBUNAL WAS NOT THE SUBJECT MATTER OF APPEAL BEFORE THE CIT(A). WHETH ER THE ISSUE IN RESPECT OF WHICH THE CIT HAD EXERCISED JURISDICTION UNDER SECTION 263 OF THE ACT WAS THE SUBJECT MATTER OF APPEAL BEFORE THE CIT(A) WAS A MATTER OF FACT. IT CANNOT BE JUSTIFIED BASED ON ANY LEGAL DECISIONS. AS STATED ABOVE, THE SAID ISSUE W AS NOT ONLY INVOLVED IN APPEAL BEFORE THE CIT(A), BUT HE HAS ALSO CONSIDERED THE SAME. IN ANY VIEW OF THE MATTER, THE DECISIONS AS RELIED UPON BY THE CIT IN HIS REVISION ORDER DATED 11.03.2014 HAVE NO APPLICATION TO THE PRESENT CASE. 15. IN VIEW OF THE A BOVE, WE ARE OF THE VIEW THAT THE REVISION ORDER PASSED BY CIT UNDER SECTION 263 OF THE ACT IS CLEARLY WITHOUT JURISDICTION AND HENCE QUASHED. CONSEQUENTLY, THE FACTS BEING SIMILAR IN OTHER YEARS, THE APPEALS OF ASSESSEE FOR ALL THE YEARS ARE ALLOWED. 7 . SINCE THE MATTER OF CONTROVERSY IN THE PRESENT APPEALS ARE QUITE SIMILAR TO THE ASSESSEES OWN CASE FOR THE A.Y.2001 - 02 TO 2006 - 07 IN WHICH THE CIT HAD ALREADY INVOKING THE POWER U/S 263 OF THE ACT IN CONNECTION WITH THE ORDER PASSED BY AO BY GIVING EFFECT TO THE ORDER PASSED BY CIT(A) AND SUBSEQUENTLY HELD THAT THE JURISDICTION OF THE CIT HAS BEEN BARRED IN VIEW OF THE PROVISION OF CLAUSE (C) OF EXPLANATION - 1 BELOW SECTION 263 OF THE ACT . AC CORDINGLY , THE ORDER PASSED BY CIT U/S 263 OF THE ACT IS NOT LIABL E TO BE SUSTAINABLE IN THE EYES OF LAW , HENCE THE SAME HAS BEEN ORDERED TO BE SET ASIDE . HENCE, WE ALLOWED THE APPEAL OF THE ASSESSEE AND CONSEQUENTIA L L Y THE OTHER ITA NOS. 3288 /MUM/201 4 3289/MUM/2014 A.Y. 2008 - 09 & 2009 - 10 13 APPEAL BEARING NO. 3289/M/2014 ON SIMILAR CIRCUMSTANCES IS ALSO HEREBY ALLOWED. 8 . IN THE RESULT ALL THE APPEALS FILED BY THE ASSESSEE ARE HEREBY ORDERED TO BE ALLOWED . ORDER P RONOUNCED IN THE OPEN COURT ON 3 0 . 04 .2019 . SD/ - SD/ - ( RAJESH KUMAR ) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 3 0 . 04 .2019 . V IJAY / S R . P . S / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// SR. PRIVATE SECRETARY ) , / ITAT, MUMBAI